How does an increase in the labor force participation rate affect the marginal returns of labor in an economy operating at labor market equilibrium?

When more people start working, the labor force participation rate goes up. This means there are more workers available for jobs, which can lead to a situation where employers have many options to choose from. As a result, the marginal return of labor, which is the extra value produced by one more worker, may decrease because each additional worker contributes less to total output than before. For example, if a factory hires more workers to produce toys, at some point, adding more workers might mean they get in each other's way or have less equipment to use, so the extra toys produced by each new worker becomes smaller. Therefore, while having more workers can be good, it can also lead to diminishing returns in how much value each worker adds to the economy.